End of Banking Secrecy for Switzerland?

Swiss Banker are all shaking their heads saying, ‘In 40 years of operations we’ve never had a crisis like this one – a war like the one being waged against the Swiss banking system. We’re in the artillery sights of every country and every day there are new attacks’,” recounted Paolo Bernasconi, a business law professor at St Gallen University and former Ticino public prosecutor.

"Many bank directors are unable to leave Switzerland because they risk being arrested.”

The storm sweeping through the Swiss banking sector can also have terrible consequences for those not directly involved. In August, the two teenage sons of a Geneva banker who flew to the US on holiday were detained by customs officials on arrival and grilled about their father’s activities.

“For 50 years, Swiss banks have lived by the following rule: we strictly uphold Swiss legislation while ignoring foreign legal norms. This has earned us a great deal of money – not just for the banks, but us as well,” Bernasconi said.

“Today we’re paying the price. But it’s not just those who were responsible in the past who are paying for it, but the new generation as well; they are losing their jobs and suffering from the impact of the crisis.”

Not so long ago, bank directors and politicians claimed that banking secrecy was “not negotiable”. But they underestimated the speed with which attitudes were changing in the international fight against tax evasion.

In 2009 when the G20 and the Organisation for Economic Co-operation and Development (OECD) officially took up the battle against banking secrecy, Switzerland was placed on a grey list of countries accused of not cooperating on tax matters.

To avoid ending up on a blacklist, Switzerland was obliged to urgently adopt a range of OECD standards, including ending the historic distinction between tax fraud and tax evasion, which was unacceptable for other countries.

Under pressure from the US, the Swiss were also forced to hand over data on thousands of clients of Swiss banks to American authorities.

To avoid the automatic exchange of tax information, which would effectively mean the end of banking secrecy, the government is currently pursuing a new path – negotiating bilateral tax treaties, known as Rubik accords, with interested countries.

Bilateral tax agreements have already been signed with Germany, Britain and Austria. Switzerland has agreed to levy a punitive retroactive tax on undeclared capital to regularize the past and apply a withholding tax to future interest income from those accounts.

But right-of-centre Swiss parties have launched a referendum against the three Rubik treaties already signed.

These tax agreements serve as a guaranteed amnesty for Swiss bankers who today can no longer risk leaving Switzerland.

In the face of such unprecedented attacks, will the Swiss banking industry be able to survive the death of banking secrecy or is there a risk it will lose huge amounts of managed funds?

If you have Unreported Income FromSwiss Banks, contact the Lawyers at Marini & Associates, P.A. for a FREE Consultation at www.TaxAid.usor www.TaxLaw.msor Toll Free at 888-8TaxAid (888 882-9243).